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The Sustainability Paradox

How Economic Ecosystems and Institutional Quality Shape Innovation Pathways to Environmental Sustainability

Bibliographic Data

ID12308802
AuthorsKaren Girgis (0009-0002-4561-4834, German University in Cairo New Cairo Egypt, corresponding author), Dina Yousri (0000-0003-4506-3294, German University in Cairo New Cairo Egypt)
Year2026
Publication date2026-02-27
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueSustainable Development (JOURNAL)
Journal identifiersISSN: 0968-0802 • E-ISSN: 1099-1719
PublisherWiley (PUBLISHER • GB)
DOI10.1002/sd.70890
OpenAlexW7134201574
LanguageEN
References cited54

Joint levers for green growth in emerging economies, specifically innovation, finance, institutional quality, and openness are widely emphasized, yet their combined environmental consequences remain insufficiently understood, particularly when potential nonlinear dynamics are taken into account. This study examines how research and development, foreign direct investment, trade openness, financial development, gross capital formation, and institutional quality shape CO 2 emissions in a panel of 20 emerging economies using generalized additive models that flexibly recover smooth marginal and interaction effects. The results reveal strongly nonlinear and regime‐dependent relationships, including an innovation‐based inverted‐U for R&D, a U‐shaped profile for FDI, and predominantly emission‐increasing trade effects, alongside complex roles for finance, capital formation, and governance. Interactions show that the environmental consequences of R&D are critically conditioned by trade and FDI. The analysis highlights that innovation is not intrinsically green; its climate impact depends on the surrounding financial, institutional, and openness architecture

Capital (architecture · Climate change · Emerging markets · Environmental quality · Openness to experience · Panel data · Quality (philosophy · Sustainability · Economic and Technological Innovation · Energy, Environment, Economic Growth · Environmental Sustainability in Business

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